Company Name: Rite Aid Corp.
Public Availability Date: March 31, 2006

Document Sections:

INQUIRY LETTER
INQUIRY LETTER
APPENDIX
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER

[INQUIRY LETTER]

February 14, 2006

BY HAND DELIVERY

Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549

RE: Rite Aid Corporation - Omission of Stockholder Proposal Pursuant
to Rule 14a-8

Ladies and Gentlemen:

On behalf of our client, Rite Aid Corporation, a Delaware corporation (the "Company"), we are submitting this letter pursuant to Rule 14a-8(j) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to respectfully request that the Staff of the Division of Corporation Finance (the "Staff") of the Securities and Exchange Commission (the "Commission") concur with the Company's view that, for the reasons stated below, the stockholder proposal (the "Proposal") submitted by the Comptroller of the City of New York (the "Proponent") may properly be omitted from the proxy materials (the "Proxy Materials") to be distributed by the Company in connection with its 2006 annual meeting of stockholders (the "2006 Annual Meeting").

The Company intends to file its definitive Proxy Materials for the 2006 Annual Meeting on or about May 17, 2006. Pursuant to Rule 14a-8(j)(2), enclosed herewith are six copies of each of (i) this letter and (ii) a letter dated January 9, 2006, which is attached hereto as Exhibit A, from the Proponent with the Proposal attached. In accordance with Rule 14a-8(j), a copy of this submission is being sent simultaneously to the Proponent.

I. The Proposal

On January 13, 2006, the Company received the Proposal for inclusion in its Proxy Materials. The text of the Proposal is reprinted below as it was submitted to the Company:

RESOLVED, that the shareholders request the Board of Directors to initiate the appropriate process to amend the Company's governance documents (certificate of incorporation or bylaws) to require that the Board present the appointment of the independent auditors for shareholder ratification or rejection at the annual meeting; and that ratification would require a majority vote of votes actually cast "for" or "against", excluding abstentions and broker-non votes.

For the reasons set forth below, the Company believes that the Proposal deals with the ordinary business operations of the Company and consequently may be omitted from the Proxy Materials pursuant to Rule 14a-8(i)(7).

II. The Company May Exclude the Proposal and the Supporting Statement Pursuant to Rule 14a-8(i)(7) Because the Proposal Concerns the Ordinary Business Operations of the Company

Rule 14a-8(i)(7) of the Exchange Act allows a company to omit from its proxy materials a shareholder proposal and any statement in support thereof "[i]f the proposal deals with a matter relating to the company's ordinary business operations." The ordinary business rule operates to exclude shareholder proposals that "deal with ordinary business matters of a complex nature that shareholders, as a group, would not be qualified to make an informed judgment on, due to their lack of business expertise and their lack of intimate knowledge of the issuer's business." Release No. 34-12999 (Nov. 22, 1976); see also Release No. 34-40018 (May 21, 1998).

The Company is a Delaware corporation, and under the Delaware General Corporation Law ("DGCL"), the board of directors has the authority to conduct the ordinary business of the corporation. Pursuant to Section 141(a) of the DGCL, "[t]he business and affairs of every corporation organized under [the DGCL] shall be managed by or under the direction of a board of directors, except as may be otherwise provided in [the DGCL] or in its certificate of incorporation." Further, Section 122(5) of the DGCL empowers each corporation to appoint and compensate its advisers and agents. The selection of the Company's independent auditor by the Audit Committee, in its capacity as a committee of the Board of Directors, is squarely within the scope of the Audit Committee's authority under state law.

Moreover, changes to federal law after the passage of the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley"), and the corporate governance listing standards of the New York Stock Exchange (the "NYSE"), on which the Company is listed, place sole and direct responsibility with the audit committee of a company's board of directors for the appointment, compensation, retention and oversight of the independent auditor. Section 301 of Sarbanes-Oxley; Exchange Act Rule 10A-3; NYSE Listed Company Manual Section 303A.07. While we acknowledge that the instructions to Exchange Act Rule 10A-3 state that the provisions of the rule are not intended to conflict with or affect "any requirement or ability under a listed issuer's governing law or documents or other home country legal or listing provisions that requires or permits shareholders to ultimately vote on, approve or ratify" the selection of the independent auditor, we note that the Company is not mandated by law or contract to allow for stockholder ratification of its independent auditor selection. Therefore, the rule permits, but does not require, companies to adopt policies providing for stockholder ratification of the independent auditor selection.

In evaluating and selecting an auditor, the Company's Audit Committee must consider a number of factors, including the auditor's experience, industry expertise, breadth and depth of resources (including the quality of individuals engaged in the audit), reliability, costs and responsiveness, as well as the Company's particular characteristics and requirements. In addition, as required by the NYSE listing standards and the Company's Audit Committee Charter, the Company's Audit Committee, in order to be in a position to evaluate the auditor's qualifications, obtains and reviews a report by the independent auditor that describes, among other things, the audit firm's internal quality-control procedures and material issues raised by the internal quality-control review, peer review or governmental inquiry, and, in order to assess the auditor's independence, all relationships between the auditor and the listed company. The Audit Committee thus considers far more information in discharging its responsibilities regarding the selection of the independent auditor than can or should be presented to the general stockholder population. The complexity and breadth of information the Audit Committee is required to take into account and evaluate in connection with the selection of the independent auditor renders this business decision precisely of the type of "matters of a complex nature upon which shareholders, as a group, would not be in a position to make an informed judgment" and which the ordinary business rule is intended to exclude. See Release No. 34-40018 (May 21, 1998).

Accordingly, where a proposal relates to the selection or ratification of a company's independent auditor, the Staff has consistently affirmed the position that such proposals may be excluded under Rule 14a-8(i)(7) as relating to ordinary business operations. The Charles Schwab Corp. (Feb. 23, 2005); Cousins Properties Inc. (Feb. 17, 2004); Wendy's International, Inc. (Jan. 29, 2004); Xcel Energy (Jan. 28, 2004); Dover Corp. (Jan. 27, 2004); Apache Corp. (Jan. 25, 2004); Paccar, Inc. (Jan 14, 2004). No-action letters made public prior to the passage of Sarbanes-Oxley are also consistent with this position. See, e.g., Fleetwood Enterprises (Apr. 24, 2002); SONICblue Inc. (Mar. 23, 2001); Excalibur Technologies Corp. (May 4, 1998). In issuing no-action letters in the foregoing cases, the Staff clearly recognized that the selection of the independent auditor relates to a company's ordinary business operations.

III. Conclusion

For the reasons stated above, the Company believes that the Proposal and its supporting statement intrude upon the Board's statutory authority to manage the business and affairs of the Company under applicable law and relate to ordinary business matters. As a consequence, the Company believes that the Proposal and its supporting statement may properly be omitted from the Proxy Materials pursuant to Rule 14a-8(i)(7), and we respectfully request that the Staff concur with the Company's view on this basis.

Should the Staff disagree with our conclusions regarding the omission of the Proposal, or should any additional information be desired in support of our position, we would appreciate the opportunity to confer with the Staff concerning these matters prior to the issuance of the Staff's response. Please do not hesitate to contact the undersigned at (202) 371-7233.

Very truly yours,

/s/

Marc S. Gerber

Attachments

cc: Kenneth B. Sylvestor
The City of New York
Office of the Comptroller
Bureau of Asset Management
1 Centre Street, Room 736
New York, NY 10007-2341

[INQUIRY LETTER]

January 9, 2006

Mr. Robert Sari
Secretary
Rite Aid Corporation
30 Hunter Lane
Camp Hill, PA 17011

Dear Mr. Sari:

I write to you on behalf of the Comptroller of the City of New York, William C. Thompson, Jr. The Comptroller is the custodian and a trustee of the New York City Employees' Retirement System, the New York City Teachers' Retirement System, the New York City Police Pension Fund, and the New York City Fire Department Pension Fund, and custodian of the New York City Board of Education Retirement System (the "Systems"). The Systems' boards of trustees have authorized the Comptroller to inform you of their intention to present the enclosed proposal for the consideration and vote of stockholders at the company's next annual meeting.

The Systems' boards of trustees have passed resolutions calling on companies to submit the selection of their independent auditors for ratification by their shareholders. We believe that shareholder ratification of the selection of the independent auditor is a practice of good corporate governance, which is consistent with the efforts of federal and state legislatures, and regulatory bodies to restore investor confidence in the governance of public companies and the stock markets.

I, therefore, offer the enclosed proposal for the consideration and vote of shareholders at the company's next annual meeting. It is submitted to you in accordance with Rule 14a-8 of the Securities Exchange Act of 1934, and I ask that it be included in the company's proxy statement.

Letters from Bank of New York certifying the Systems' ownership, for over a year, of shares of Rite-Aid Corp. common stock are enclosed. Each System intends to continue to hold at least $2,000 worth of these securities through the date of the company's next annual meeting.

We would be happy to discuss the proposal with you. Should the board of directors decide to endorse its provision as corporate policy, we will withdraw the proposal from consideration at the annual meeting. If you have any questions on this matter, please feel free to contact me at (212) 669-2013.

Very truly yours,

/s/

Kenneth B. Sylvester

Enclosures

[APPENDIX]
SHAREHOLDER RATIFICATION OF THE APPOINTMENT OF AUDITORS

Submitted by William C. Thompson, Jr., Comptroller, City of New York, on behalf of the Boards of Trustees of the New York City Pension Funds

Whereas, the US Congress enacted the Sarbanes-Oxley Act of 2002 (the "Act") in order to improve the accuracy and reliability of corporate financial disclosures, and help restore public trust and investor confidence in the stock markets; and

Whereas, the Act created the Public Company Accounting Oversight Board with powers to register public accounting firms; establish rules and standards on auditing quality control, ethics and independence; conduct investigations and disciplinary proceedings; and enforce compliance; and

Whereas, Section 301 of the Act provides that the audit committee of a publicly traded company, which must be composed of independent directors, is responsible for the appointment, compensation and oversight of any work performed by a registered accounting firm; and

Whereas, many audit committees have sought to establish best practices to effectively carry out their responsibility under law; and

Whereas, many public companies submit the appointment of independent auditors to shareholder ratification. An April 2003 survey of 89 Fortune 1000-sized companies, conducted by Deloitte & Touche, found that a majority of the companies planned to submit the 2003 auditor selection to shareholder ratification; and

Whereas, many companies believe that shareholder ratification of the appointment of the independent auditor is advisable and in the best interests of shareholders; and the Bylaws of some companies provide that the selection of independent auditors must be presented for shareholder ratification or rejection at the annual meeting;

Resolved, that the shareholders request the Board of Directors to initiate the appropriate process to amend the Company's governance documents (certificate of incorporation or bylaws) to require that the Board present the appointment of the independent auditors for shareholder ratification or rejection at the annual meeting; and that ratification would require a majority vote of votes actually cast "for" or "against", excluding abstentions and broker-non votes.

[INQUIRY LETTER]

March 21, 2006

BY EXPRESS MAIL

Securities and Exchange Commission
Division of Corporation Finance
Office of the Chief Counsel
100 F Street, N.E.
Washington, D.C. 20549

Re: Rite Aid Corporation

Omission of Shareholder Proposal submitted by New York City Pension Funds

To Whom It May Concern:

I write on behalf of the New York City Pension Funds (the "Funds") in response to the February 14, 2006 letter sent to the Securities and Exchange Commission (the "Commission") by Skadden, Arps, Slate, Meagher & Flom LLP on behalf of Rite Aid Corporation ("Rite Aid" or the "Company"). In that letter, the Company contends that the Funds' shareholder proposal (the "Proposal") may be omitted from the Company's 2006 proxy statement and form of proxy (the "Proxy Materials") under Rules 14a-8(i)(7) under the Securities Exchange Act of 1934.

I have reviewed the Proposal, as well as the February 14, 2006 letter. Based upon that review, as well a review of Rule 14a-8, it is my opinion that the Proposal may not be omitted from the Company's 2006 Proxy Materials. Accordingly, the Funds respectfully request that the Division of Corporation Finance (the "Division") deny the relief that the Company seeks.

I. The Proposal

The Proposal consists of a series of whereas clauses followed by a resolution. The whereas clauses set out: (a) the enactment of the Sarbanes-Oxley Act in 2002 to improve the accuracy and reliability of corporate financial disclosures; (b) that many public companies submit the appointment of independent auditors to shareholder ratification; and (c) that many companies believe shareholder ratification is in the best interest of shareholders. These clauses are followed by a Resolved clause that states:

Therefore, be it resolved that the shareholders request the Board of Directors to initiate the appropriate process to amend the Company's governance documents (certificate of incorporation or bylaws) to require that the Board present the appointment of the independent auditors for shareholder ratification or rejection at the annual meeting; and that ratification would require a majority vote of votes actually cast "for" or "against", excluding abstentions and broker non votes.

II. The Company's Position and the Funds' Response

In its letter of February 14, 2006, the Company requested that the Division not recommend enforcement action to the Commission if the Company omits the Proposal under SEC Rule 14a-8(i)(7) (relating to ordinary business of the Company). The Company bears the burden of proving that Rule 14a-8(i)(7) applies. As detailed below, the Company has failed to meet that burden and its request for "no-action" relief should, accordingly, be denied.

A. Proposals on Significant Social Policy Matters Are Not "Ordinary Business" and May Not Be Omitted Under Rule 14a-8(i)(7).

In light of the continuing public and governmental concerns over maintaining auditor independence, protecting the integrity of corporate financial statements, and strengthening corporate governance, proposals which seek shareholder ratification of independent auditors should not be excluded as "ordinary business" under Rule 14a-8(i)(7).

Such an outcome would be particularly appropriate under the singular facts relating to Rite Aid, whose senior officers were found to have engaged in criminal accounting fraud on a massive scale. In 2003, Rite Aid's Chief Counsel was convicted on securities and accounting fraud charges that led to a $1.6 billion restatement of earnings. In 2004, Rite Aid's Chief Executive Officer and Chief Financial Officer were also found guilty on similar charges. See, e.g., "Ex-Rite Aid Chief to Serve Up to 10 Years in Prison," New York Times (May 14, 2004). These former senior executives are all serving extended prison terms for their involvement in perpetrating Rite Aid's criminally fraudulent financial statements. Other Rite Aid executives also pleaded guilty to the financial fraud. Id.

For its part, KPMG, Rite Aid's auditor, paid $125 million to settle lawsuits alleging multiple failures in its oversight of Rite Aid, which permitted the fraud to go forward. See, e.g., "KPMG agrees to settle Rite Aid, Oxford shareholder suits for $200 million," Associated Press (March 10, 2003). Thus, protection of financial integrity and auditor independence, and the disclosures and ratification which could help safeguard that independence, are of vital interest to Rite Aid shareholders. That is true whether or not the Staff were to issue generally applicable guidance that ratification of independent auditors falls outside ordinary business.

At the same time, we submit that it would be appropriate for the Staff to decide that in all cases going forward, proposals seeking ratification of independent auditors should not be excluded as relating to ordinary business. The Division of Corporation Finance has at times taken the opportunity to change its guidance as to what is considered "ordinary business," when it has decided that proposals related to "significant social policy issues." Thus, a July 12, 2002 Staff Legal Bulletin advised that the Division would no longer issue no-action letters for the exclusion of shareholder proposals relating to executive compensation, stating:

The fact that a proposal related to ordinary business matters does not conclusively establish that a company may exclude the proposal from its proxy materials. As the Commission stated in Exchange Act Release No. 40018, proposals that relate to ordinary business matters but that focus on "sufficiently significant social policy issues...would not be considered to be excludable because the proposals would transcend the day-to-day business matters." See Amendments to Rules on Shareholder Proposals, Exchange Act Release No. 40018 (May 21, 1998).

Staff Legal Bulletin, SLB 14A (July 12, 2002) (footnotes omitted in citations to Bulletin).

The Bulletin then reviewed the SEC's historical position of not permitting exclusion on ordinary business grounds of proposals relating to significant policy issues:

The Commission has previously taken the position that proposals relating to ordinary business matters "but focusing on sufficiently significant social policy issues... generally would not be considered to be excludable, because the proposals would transcend the day-to-day business matters and raise policy issues so significant that it would be appropriate for a shareholder vote." The Division has noted many times that the presence of widespread public debate regarding an issue is among the factors to be considered in determining whether proposals concerning that issue "transcend the day-to-day business matters."

Id. As shown below, protecting auditor independence and corporate financial integrity is also a significant social policy issue that "transcends day-to-day business matters" and so should not be excluded as ordinary business.

While, as the Company's Letter notes, prior no-action advice has found ratification of independent auditors to be ordinary business, all such advice since 2002 was issued without the benefit of any proponent opposition. See Charles Schwab Corp. (Feb. 23, 2005); Cousins Properties Inc. (Feb. 17, 2004); Wendy's International Inc. (Jan. 29, 2004); Xcel Energy (Jan. 28, 2004); Dover Corp. (Jan. 27, 2004); Apache Corp. (Jan. 25, 2004); and Paccar, Inc. (Jan 14, 2004)¹. On the fuller record below, no-action relief as to auditor ratification proposals should not be granted, and we respectfully request that the Staff issue guidance to that effect.

B. Protecting Auditor Independence Is a Significant Social Policy Issue

Public concern as to protecting auditor independence and the integrity of financial statements has been substantial and ongoing in the wake of recent corporate fraud scandalsstarting with Enron, WorldCom, and Rite Aid itself in 2002; continuing from 2003 to 2005 with Parmalat and Refco; and still raised in Commission materials in 2005 and 2006. And as detailed below, public and market demand for protecting auditor independence has been so overwhelming that as of today, the great majority of public corporations already provide for shareholder ratification of the selection of independent auditors.

Beginning in 2002, the President himself has emphasized that public confidence in audited financial statements is a hallmark of the American financial system. Indeed, on March 7, 2002, President Bush, in his "Ten Point Plan" to increase corporate accountability and responsibility, directly addressed the issue of investor confidence in the independence of corporate auditors. Point Seven of the Plan states, "Investors should have complete confidence in the independence and integrity of company auditors." The President's Ten-Point Plan can be found at: http://www.whitehouse.gov/infocus/corporateresponsibility/index2.html

Similarly, in his March 13, 2002 presentation to the House Finance Committee, Representative Michael Oxley commented on the importance of improving regulation of corporate governance practices so as to strengthen the public's faith in company financial statements.

Representative Oxley testified:

Hearings held in this Committee over the past few months have demonstrated yet again the need for modernizing our financial reporting and disclosure system. Also, it is clear that we must have stronger oversight of the accounting profession.

There should be no question that the Federal securities laws need to be updated to ensure that investors have access to the most recent, transparent, and meaningful information concerning public companies. Enhancing the public's faith in financial statements is absolutely critical. They serve as the bedrock of our capital markets.

Testimony to House Financial Services Bill-No: H.R. 3763 (March 13, 2002).

As the Sarbanes-Oxley Act advanced through Congress, the Senate Committee on Banking, Housing, and Urban Affairs addressed this concern in their Report on the Public Company Accounting Reform and Investor Protection Act of 2002, stating: "The issue of auditor independence is at the center of this legislation. Public confidence in the integrity of financial statements of publicly-traded companies is based on belief in the independence of the auditor from the audit client." Senate Report 107-205 (June 26, 2002) at 14.

At the same time, in his July 2002 address to the Banking, Housing and Urban Affairs committee, then Federal Reserve Chairman Alan Greenspan commented on the importance of investor trust in corporate financial disclosures. He testified, "Market participants must have confidence that our predominately voluntary system of exchange is transparent and fair.... Thus, our market system depends critically on trust. Falsification ... [is] highly destructive to free-market capitalism and, more broadly, to the underpinnings of our society." Testimony of Chairman Alan Greenspan, Federal Reserve Board's Semiannual Monetary Policy Report to the Congress, before the Senate Committee on Banking, Housing, and Urban Affairs, (July 16, 2002).

Current corporate governance initiatives such as auditor ratification proposals are supported by those same widely-discussed social policy issues first raised in 2002: Heightened disclosure of the material facts as to the level of auditor independence, coupled with an informed shareholder vote to ratify auditors, inevitably raise investor confidence in audited statements. That resulting investor confidence likely explains why, even with the increased duties and authority of corporate audit committees to oversee audits and auditors, most public companies nonetheless provide on their ballots for shareholder ratification of the selection of independent auditors.

Those broad public concerns and policy discussions have continued to the present day. Scandals such as those reported between 2003 and 2005 at Parmalat and at Refco attracted great public attention, and again highlighted the ongoing need for vigilance in the oversight of purportedly independent auditors. At Parmalat, the fraud included a non-existent four billion dollar "reserve," which Parmalat's non-U.S. auditors accepted with little question. Just last week, a federal court upheld much of an Italian receiver's complaint against the non-U.S. auditors. See In re Parmalat Securities Litigation, 04 MD 1653 (LAK), 04 Civ. 9771 (LAK), 2006 U.S. Dist. LEXIS 10311 (S.D.N.Y. March 16, 2006). Then, well after the ostensible lessons of Parmalat had been publicized, Refco's fraudulent four hundred million dollar loan/receivable apparently escaped scrutiny by company auditors even during due diligence preparation for the company's initial public offing. See, e.g., "Mystery at Refco: How Could Such a Huge Debt Stay Hidden?" New York Times, (Oct. 24, 2005). Clearly, and regrettably, the policy debate as to integrity of financial statementsand of auditorsthat erupted in 2002 is still very much alive.

In light of these very public developments, it is no surprise that market participants, including most U.S. public corporations, have recognized the vital importance of increasing shareholder participation in auditor selection. In a recent study by Glass Lewis & Company, a prominent institutional investor advisory service, fully 68% of companies listed in the Russell 3000 and 90% of companies listed in the S&P 500 already submit auditor ratification for shareholder approval (Source: direct communication from Glass Lewis). Denying no-action relief to Rite Aid would simply allow Rite Aid shareholders to vote to join the broad consensus of the American corporate mainstream.

That mainstream trend is also reflected in the advice that institutional investors receive from Glass Lewis, that if a company does not allow shareholders to ratify company auditors, shareholders should withhold votes from the chairman of the company's audit committee. Another major advisory service, Institutional Shareholder Services, has a comparable policy on this issue in their 2005 Governance Policy Update. (Relevant excerpts from the Glass Lewis and ISS institutional investor advisory materials are annexed hereto)

The Commission and those who advise it have helped lead this national trend, recognizing the importance both of auditor independence, and of detailed disclosure to investors regarding auditor independence. In its 2003 Release entitled "Strengthening the Commission's Requirements Regarding Auditor Independence," the Commission stated that enhanced independence rules are intended to "advance our important policy goal of protecting the millions of people who invest their savings in our securities markets in reliance on financial statements that are prepared by public companies." Release No. 33-8183, 34-47265 (May 6, 2003). Additionally in this Release, the Commission acknowledged the importance of disclosing to investors in shareholder proxy statements the information pertinent to ratification of a company's independent auditors:

Consistent with our proposal, we are requiring that the disclosures be included in a company's annual report. However, because we believe that this information is relevant to a decision to vote for a particular director or to elect, approve or ratify the choice of an independent public accountant, we are requiring that this disclosure be included in a company's proxy statement on Schedule 14A or information statement on Schedule 14C. Since the information is included in Part III of annual reports on Forms 10-K and 10-KSB, domestic companies are able to incorporate the required disclosures from the proxy or information statement into the annual report.

Id.

Indeed, even in a 2006 Report written by the Commission's Advisory Committee on Smaller Public Companies, which recommended a lessening of some Sarbanes Oxley restrictions for smaller public corporations, the Committee recognized the importance of maintaining strict auditor independence regulations. That Report stated: "Ultimately, we concluded that no modification to the Commission's independence rules is warranted with respect to auditors providing assistance to smaller public companies." Acknowledging the need for auditor independence throughout the financial system, the Committee concluded that "a separate set of auditor independence rules for larger and smaller publicly-held companies would be inappropriate." Final Report of the Advisory Committee on Smaller Public Companies to the Securities and Exchange Commission, (Draft Report, February 14, 2006). Quite recently, too, SEC Commissioner Atkins (albeit with some concerns about the breadth of regulation) noted that: "Sometimes, of course, accountants do not live up to even reasonable expectations... In some cases, accountants have been responsible for - or complicit in - improper behavior, and some auditors have been insufficiently vigilant. Our docket at the SEC attests to this..." SEC Commissioner Paul S. Atkins, Remarks before the American Institute of Certified Public Accountants (Dec. 5, 2005).

Overall, in light of the continuing public discussions as to auditor competence, integrity and independence, a proposal for shareholder ratification of a company's independent auditors addresses significant public policy and corporate governance concerns and should not be excluded as "ordinary business" under Rule 14a-8(i)(7). That is particularly true where, as here, the company has engaged in the precise wrongful conduct that auditors are hired to identify and bring to light. Therefore, Rite Aid's request for no-action relief should be denied. We further request that the Staff consider issuing broader public guidance as to proposals seeking shareholder ratification of independent auditors.

III. Conclusion

For the reasons stated above, the Funds respectfully submit that the Company's request for no-action relief should be denied.

Should you have any questions or require any additional information, please contact me. Thank you for your consideration.

Very truly yours,

/s/

Rahsan M. Boykin
Assistant General Counsel

cc: Marc S. Gerber, Esq.
Skadden, Arps, Slate, Meagher, & Flom LLP
1440 New York Avenue, N.W.
Washington, D.C. 20005-2111

-----FOOTNOTES-----

¹ In El Paso Corp. (Feb. 23, 2005), granting no-action relief where the proposal sought rotation of the company's auditors, the proponent did put in a letter in opposition that briefly mentioned financial integrity concerns. That one short letter on a very different proposal does not alter the fact that the Staff has not had the benefit of a full presentation on why protection of auditor independence, including shareholder ratification, is a significant social policy issue.

[INQUIRY LETTER]

March 27, 2006

BY HAND DELIVERY

Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549

RE: Rite Aid Corporation - Omission of Stockholder

Proposal Pursuant to Rule 14a-8

Ladies and Gentlemen:

On behalf of our client, Rite Aid Corporation, a Delaware corporation (the "Company"), we are submitting this letter in response to the March 21, 2006 letter from the Comptroller of the City of New York (the "Proponent") to the Staff of the Division of Corporation Finance (the "Staff") of the Securities and Exchange Commission (the "Commission") regarding a stockholder proposal and supporting statement (the "Proposal") submitted for inclusion in the proxy materials (the "Proxy Materials") to be distributed by the Company in connection with its 2006 annual meeting of stockholders (the "2006 Annual Meeting"). A copy of the letter is attached hereto as Exhibit A (the "Proponent Response Letter").

On February 14, 2006, we submitted a letter (the "No-Action Letter Request") on behalf of the Company to request that the Staff concur with the Company's view that the Proposal may properly be omitted pursuant to Rule 14a-8(i)(7) from the Company's Proxy Materials for the 2006 Annual Meeting. The Proponent Response Letter is the Proponent's response to the No-Action Letter Request.

For the reasons set forth below, we respectfully disagree with a number of the assertions in the Proponent Response Letter, and we again request the relief specified in the No-Action Letter Request. In accordance with Rule 14a-8(j) under the Securities Exchange Act of 1934, as amended, six copies of this letter and its attachment are enclosed and a copy of this letter is being sent simultaneously to the Proponent.

Proponent Acknowledges Staff's Consistent Position

It is worth noting that the Proponent Response Letter specifically acknowledges that the Staff has consistently affirmed the position that proposals relating to the selection or ratification of a company's independent auditor may be excluded under Rule 14a-8(i)(7) as relating to ordinary business operations. The Charles Schwab Corp. (Feb. 23, 2005); Cousins Properties Inc. (Feb. 17, 2004); Wendy's International, Inc. (Jan. 29, 2004); Xcel Energy (Jan. 28, 2004); Dover Corp. (Jan. 27, 2004); Apache Corp. (Jan. 25, 2004); Paccar, Inc. (Jan 14, 2004).

Faced with the Staff's consistent position on this topic, the Proponent, in effect, argues that (i) the Staff's position should not apply to the Company and (ii) the Staff's position fails to appreciate the significance of the Proposal. Both of these arguments lack merit.

Proponent's Attempt to Taint Current Management with the Misdeeds of Prior Management

The Proponent attempts to indirectly impugn the character and integrity of the Company's current senior officers by suggesting that the ratification of auditors should not be viewed as "ordinary business" due to the misconduct of the Company's former executives. The Proponent fails to acknowledge, however, that the relevant misconduct occurred in the 1990s and that the Company's Board of Directors subsequently replaced senior management and its independent auditors in response to the misconduct. Furthermore, the Proponent's argument fails to recognize that, as required by Commission and New York Stock Exchange ("NYSE") rules, it is the audit committee (consisting of independent directors) who selects the independent auditors and oversees and evaluates the Company's relationship with the auditors, not the Company's management.

Proponent's Attempt to Ride the "Coat Tails" of Auditor Independence

Next, the Proponent confuses the auditor independence issuewhich is, of course, a significant issuewith the stockholder ratification issue. While the Proponent discusses at length the issue of auditor independence, it has not cited any support for its proposition that stockholder ratification of the selection of auditors is a significant social policy issue.

The Proponent cites President Bush's 2002 "Ten Point Plan" on corporate responsibility and quotes from the legislative history of the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley") to argue the social importance of auditor independence. As the Staff is well aware, over the past four years issues surrounding auditor independence (and the related strengthening of audit committees) have been considered (i) by the Congress in connection with the passage of Sarbanes-Oxley, (ii) by the Commission in its adoption of rules to implement the auditor independence provisions of Sarbanes-Oxley and other auditor independence initiatives addressed in Release No. 33-8183, "Final Rule: Strengthening the Commission's Requirements Regarding Auditor Independence," (iii) by the NYSE in adopting its enhanced corporate governance listing standards, which place additional requirements on audit committees and (iv) by the Public Company Accounting Oversight Board (the "PCAOB") in adopting additional auditor independence standards. Notwithstanding the intense scrutiny of, and thoughtful consideration relating to, auditor independence issues, none of the Congress, the Commission, the NYSE or the PCAOB has asserted that auditor independence would be enhanced by stockholder ratification of the audit committee's selection of independent auditors.

Conclusion

For the reasons set forth above and in the No-Action Letter Request, the Company believes that the Proposal falls within ordinary business matters and respectfully requests that the Staff concur with the Company's view that the Proposal may be omitted pursuant to Rule 14a-8(i)(7) from the Company's Proxy Material for its 2006 Annual Meeting.

Should the Staff disagree with the Company's conclusions regarding the omission of the Proposal, or should any additional information be desired in support of the Company's position, we would appreciate the opportunity to confer with the Staff concerning these matters prior to the issuance of the Staff's response. Please do not hesitate to contact the undersigned at (202) 371-7233.

Very truly yours,

/s/

Marc S. Gerber

Attachments

cc: Rahsan M. Boykin
Assistant General Counsel
The City of New York
Office of the Comptroller
1 Centre Street, Room 1120
New York, NY 10007-2341

[INQUIRY LETTER]

March 28, 2006

BY E-MAIL AND EXPRESS MAIL

Securities and Exchange Commission
Division of Corporation Finance
Office of the Chief Counsel
100 F Street, N.E.
Washington, D.C. 20549

Re: Rite Aid Corporation: Shareholder Proposal by the New York City Pension Funds

To Whom It May Concern:

I write on behalf of the New York City Pension Funds (the Funds") in response to the March 27, 2006 letter from counsel for Rite Aid Corporation (the "Company"). That March 27 letter argues in further support of the Company's February 14, 2006 request for no-action relief under Rule 14a-8(i)(7) with respect to the Funds' shareholder proposal seeking shareholder ratification of independent auditors (the "Proposal"). The Company's letter does not attempt at all to contravene the Funds' detailed showing that auditor independence is a matter of intense public policy discussion. Rather, the Company claims that shareholder ratification of independent auditors somehow falls outside that ongoing discussion.

The Company, however, does not deny that the overwhelming majority of substantial public companies now provide for just such shareholder ratification. Thus, both public shareholders and the corporate mainstream have concluded, as an integral part of their response to this intense policy discussion, that shareholder ratification is vital to protecting auditor independence. The Proposal, which would bring Rite-Aid into the mainstream in protecting and strengthening auditor independence, therefore relates directly to significant policy issues that fall outside of ordinary business under Rule 14a-8(i)(7).

Accordingly, the Funds respectfully submit that the Company's request for no-action relief should be denied.

Very truly yours,

/s/

Rahsan M. Boykin
Assistant General Counsel

cc: Marc S. Gerber, Esq.
Skadden, Arps, Slate, Meagher, & Flom LLP

[STAFF REPLY LETTER]

March 31, 2006

Response of the Office of Chief Counsel Division of Corporation Finance

Re: Rite Aid Corporation

Incoming letter dated February 14, 2006

The proposal requests that the board initiate the appropriate process to amend the company's governance documents (certificate of incorporation or bylaws) to require that the board present the appointment of independent auditors for shareholder ratification or rejection at annual meetings.

There appears to be some basis for your view that Rite Aid may exclude the proposal under rule 14a-8(i)(7), as relating to its ordinary business operations (i.e., the method of selecting independent auditors). Accordingly, we will not recommend enforcement action to the Commission if Rite Aid omits the proposal from its proxy materials in reliance on rule 14a-8(i)(7).

Sincerely,

/s/

Ted Yu
Special Counsel